Regulation of the mortgage market

Up until the end of October 2004, the mortgage industry was under the authority of the Mortgage Code Compliance Board (MCCB). It is now run by the Financial Services Authority (FSA). The FSA licenses and regulates lenders and brokers. It also outlines rules covering mortgage advertising, advice and promotions. If the rules are broken, the person or organisation in breach of these, may be subject to discipline, fines or if necessary prison.

The key aim of the FSA is to bring clarity to the consumer. This is why they have made it obligatory for all brokers or lenders to provide Key Facts Illustrations (KFI) and Initial Disclosure Documents (IDD) to their customers. The contents of these documents are presented in a simple and straightforward manner, and are designed to give the consumer a better understanding of the process of purchasing a property.
Key Facts Illustration
This document includes fundamental details of the mortgage they have selected, information relating to the broker and the risks associated with changing interest rates. The total cost of the mortgage, monthly repayments, fees and the rate of interest on the loan will be stated in this document. It will also show any fees or commission that the broker will earn on your purchase of the mortgage.
Initial Disclosure Document
The broker shows this to their customer upon first contact. It shows what sort of service the broker provides, whether they have access to mortgage products from across the mortgage market or only to a limited number of products.  This is particularly important to know so that you can scour the market to find a broker providing the most relevant information for your situation. In addition to this, the broker must show you if they are earning any fees or commission from mortgage lenders that they secure a deal with.
Complaints
If you are unhappy with the service you receive from a broker, you have the right to complain. The first port of call is usually the broker’s company, but if you are not satisfied by the outcome if this, you can take the matter to the Financial Ombudsman Service, which is an independent complaints service. They can be contacted by telephone on 0845 080 1800. Or you can register a complaint in writing at their postal address: The Financial Ombudsman Service, South Quay Plaza, 183 Marsh Wall, London E14 9SR.

Shopping around for the best mortgage deals has been made more difficult by regulations imposed by the Financial Services Authority (FSA), according to Nationwide building society’s chief executive, Philip Williamson.
The FSA has had responsibility for mortgage regulation since October 2004, but apparently their new regulations have made it harder, not easier, for people to compare mortgage deals offered by different lenders. According to the Nationwide chief executive interviews for people trying to find a mortgage are twice as long as they were before the regulations were put in place, because of extra compliance procedures. ‘The regulatory process takes so long that most shoppers can’t be bothered going down the road and having another hour and a half with other suppliers. What we used to do in 45 minutes, now takes an hour and a half.’